Plan To Cut Welfare Sounds Alarm

City Firms Face Loss, Study Says

Neighborhood businesses throughout Chicago could lose as much as a quarter of a billion dollars a year if welfare cuts being debated in the Senate are passed, according to a study sponsored by the Community Renewal Society.

Under welfare reform legislation passed earlier this year by the U.S. House, federal funding to the states for public aid would be cut sharply, and eligibility requirements for welfare recipients would be significantly tightened. For example, for the first time, families would be limited to a total of five years of benefits. At present, there is no time limit.

If that legislation becomes law, the amount of money now coming to Chicago in the form of public aid grants under the Aid to Families with Dependent Children program would be cut in half for a loss of nearly $263 million a year, the study predicted. And cuts in other, smaller programs would make the loss even deeper.

The results of the study are to be discussed Wednesday at a news conference at noon at the Chicago Temple, 77 W. Washington St., featuring representatives of several social welfare organizations in the city. The Community Renewal Society, which funded the study, is an arm of the United Church of Christ, working to improve race relations and fight poverty.

The public aid reductions "are going to be very devastating, obviously, on the recipients," said Robert Lucas, executive director of the Kenwood-Oakland Community Organization. "But it's also going to really harm the local businesses. They're going to be hit hard."

And the greatest impact will be in the city's poorest communities.

"If they cut public aid, we will close up," said Hasan Sajah, manager of Chicago Austin Meat and Produce at 5981 W. Chicago Ave. in the Far West Side neighborhood of Austin. "It will hurt me and my neighbors too. They have no cars or nothing. They will have to walk four blocks to the next store."

Employees of the store, located just doors from the affluent suburb of Oak Park, said three out of four of its customers are on public assistance.

"They don't really see (the welfare cuts) coming," said clerk Darnell Miller, as he stamped prices on beverages and placed them in a large cooler. "I see it coming because I have a wife and kids. And when it comes, it will hit (recipients) hard."

According to the new study, the welfare cuts will mean a drop of more than $19 million a year in the economic activity in the Austin neighborhood. That represents about 2 percent of the total income of the community, which in 1989 came to just under $1 billion.

One of the shoppers in the store on a recent afternoon was 17-year-old Danielle Bowen, who paid with food stamps that were part of the public assistance that her five-member family receives.

If cuts are as deep as predicted in the study, Bowen said, "people are going to get stuck up left and right. The crime rate will go way up." As for her family, she added, "If it is not there, we will have to get by the best way we can."

Other communities that would suffer annual losses of $10 million or more would be Humboldt Park, West Englewood, North Lawndale and Englewood, according to the study.

The official Chicago community areas vary in size and population, and the five facing losses of $10 million or more are among the larger ones.

The South Side neighborhood of Grand Boulevard, by contrast, is one of the city's smaller communities. Nonetheless, it's facing an income reduction for residents of nearly $9.6 million-or more than 5 percent of the neighborhood's total annual income. And its poverty rate is already the second-highest in the city, 64.7 percent.

"They did some cuts a couple of years ago, and the business dropped big-time," said Ghaleb Kawar, co-owner of the Stateway Food and Liquor store at 3515 S. State St., across from the Stateway Gardens public housing development. "Ninety-five percent of our customers are on public aid, and it is their only source of income."

In the nearby neighborhood of Oakland, where the poverty rate is 72.3 percent, the public aid changes would mean even deeper cuts in the local economy. According to the report, Oakland would see a $2.4 million drop in income under the proposed welfare reductions. That represents about 8 percent of the community's total annual income.

But, as the new report indicates, poor neighborhoods are not the only communities where the cuts will have an impact.

For example, the report estimates that even such wealthy neighborhoods as Lincoln Park and Hyde Park would suffer the loss of more than $700,000 in income annually because of the cuts. And every city community, even those on the Far Northwest Side and Far Southwest Side with relatively few AFDC families, would see income drop to some extent.

Dean Schott, a spokesman for the Illinois Department of Public Aid, said he couldn't comment on the new study because the final details of the nation's welfare reform package have yet to be determined.

The new study was prepared based on estimates that the reforms would result in a 50 percent decrease in money available for AFDC grants.